Earnings call transcript: Andritz Q1 2025 sees 7% revenue drop, stock up

Andritz AG reported a 7% decline in revenue for the first quarter of 2025, totaling 1.8 billion euros. Despite the dip, the market reacted positively, with the company’s stock price surging by 10.62% to 63 euros, reflecting investor optimism driven by strong order intake and strategic acquisitions. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.06, and analysis suggests the stock is currently undervalued. The company has delivered impressive year-to-date returns of 22.32%, outperforming many peers in the industrial sector. The order intake increased by 20% to 2.3 billion euros, while the order backlog reached 10.2 billion euros. The company’s net income stood at 89 million euros, representing a 15.1% margin. InvestingPro analysis reveals the company trades at an attractive P/E ratio of 12.52 and offers a substantial dividend yield of 4.55%, having maintained dividend payments for 24 consecutive years.

Key Takeaways

• Revenue fell 7% year-over-year to 1.8 billion euros.
• Order intake rose 20% to 2.3 billion euros, boosting investor confidence.
• Stock price increased by 10.62% following the earnings announcement.
• Strategic acquisitions in clean air and paper machines sectors.
• Service business achieved a record high, contributing to revenue growth.

Company Performance

Andritz’s performance in Q1 2025 was marked by a notable decline in revenue, attributed to challenges in certain market segments. However, the company showed resilience through a significant increase in order intake and a robust order backlog. This growth was supported by strategic acquisitions and a focus on innovation, particularly in green hydrogen and carbon capture technologies. The company’s diversified business model and strong position in the hydropower and pulp and paper sectors provided a competitive edge.

Financial Highlights

• Revenue: 1.8 billion euros (7% decline year-over-year)
• Order Intake: 2.3 billion euros (20% increase)
• Order Backlog: 10.2 billion euros
• Net Income: 89 million euros (15.1% margin)
• Free Cash Flow: 23 million euros (slightly positive)
• Comparable EBITA Margin: 8.2% (up from 8.1%)

Outlook & Guidance

Andritz has set a revenue guidance of 8.0 to 8.3 billion euros for 2025, with a comparable EBITA margin target between 8.6% and 9%. Looking further ahead, the company aims for revenues between 9 and 10 billion euros by 2027, with a margin exceeding 9%. The company remains optimistic about the potential of the pulp and paper market to replace plastics in packaging and expects no significant impact from current tariff situations.

Executive Commentary

Dr. Joachim Schoenbeck, CEO of Andritz, expressed satisfaction with the first quarter’s performance, stating, "We are happy with the first quarter. We are looking forward with solid project activities to continue on that path." He also highlighted the company’s business model resilience, noting, "Our business model is based on a system where usually our customers pay the tariffs."

Risks and Challenges

• Market Volatility: Fluctuations in global markets could impact order intake and revenue.
• Supply Chain Disruptions: Potential disruptions could affect production and delivery timelines.
• Competitive Pressure: Increasing competition in key sectors may challenge market share.
• Regulatory Changes: Shifts in environmental regulations could impact operational costs.
• Economic Slowdown: A slowdown in key markets like North America and Europe could affect growth.

By strategically navigating these challenges and capitalizing on its diversified portfolio, Andritz aims to maintain its competitive position and achieve its long-term growth targets. The company’s strong fundamentals are reflected in its EV/EBITDA ratio of 6.14 and robust balance sheet with more cash than debt. For deeper insights into Andritz’s valuation and growth potential, including access to 6 additional ProTips and comprehensive financial metrics, explore InvestingPro’s detailed research report, part of their coverage of over 1,400 stocks.

Full transcript - Andritz AG (ANDR) Q1 2025:

George, Chorus Call Operator, Chorus Call: Ladies and gentlemen, welcome to the Andridge Q1 twenty twenty five Results Conference and Live Webcast. I am George, the Chorus Call operator. I would like to remind you that all participants will be listen only mode and the conference is being recorded. The presentation will be followed by Q and A session. At this time, it’s my pleasure to hand over to Matthias Please go ahead.

Matthias Feifenberger, Investor Relations, Andrids: Thanks a lot, George. It’s Matthias Feifenberger. A warm welcome from Andrids this morning. I’m in charge of Investor Relations, and I would like to welcome you to this to today’s call on the Q1 twenty five financial results. It’s a it’s a big pleasure for me to have our CEO, doctor Joachim Schoenbeck, and our CFO, Vanessa Helvingen, with me in the call.

I’d like to show you the disclaimer for a second and then remind you of the agenda today. So we’ll start the call with the CEO key messages and the q one highlight, followed by the by the financial performance, an update on the business areas, and then finally an outlook and the targets meeting term. And with that, it’s my pleasure to hand over to the CEO, doctor Joachim Schoenberg.

Dr. Joachim Schoenbeck, CEO, Andrids: Thank you, Matthias. Good morning, everybody. Welcome to our conference call. Thank you very much for spending your time with us and your interest in our performance. If we conclude on the first quarter, we would say we are quite happy with the business performance in that quarter, considering what’s happening besides us in the world.

We had a significant increase in order intake. We had a big step up in pulp and paper hydropower year on year. We could record quite stable development in metals, and we could see further growth in our service business. The revenue declined. You know that order intake, particularly in the first half of last year, rather low.

But we could increase the service revenue, which is good and in line what we strategically have planned. The EBITA remains stable on the profitability side on comparable EBITA and on reported EBITA level. It’s, I would say, a mixture of quite solid project execution and an improved mix that increased service share. We also could see in the first quarter already the first fruits of our restructuring efforts we’ve done last year, which is then in total quite good. We yes, we had a decline in the net income margin, and that’s more seasonal impact more or less beyond what was is following on the sales decline.

If we go to the next page, we see some the main KPIs in more detail. Order intake at €2,300,000,000 up 20 from last year. Revenue, as I said, dropped by 7% to €1,800,000,000 Happy that the order backlog can you hear me still?

Matthias Feifenberger, Investor Relations, Andrids: Yes.

Dr. Joachim Schoenbeck, CEO, Andrids: Okay. I was informed that I’m in silent mode. Okay. So order backlog heavily increased to €10,200,000,000 which is for to look for the outlook quite stable cushion. Comparable EBITA margin at 8.2%, slightly up from 8.1% at a total of €145,000,000 and the reported EBITA margin at 8.1%, stable to last year at €142,000,000 Net income dropped to €89,000,000 and a 15.1% margin.

If we go to the if we look to the order intake in more detail, you can see that we have the growth is clearly driven by Pulp and Paper, up by 52% from last year, $975,000,000. So I would say a good quarter. Metals and Environment and Energy rather stable compared to last year. And hydropower up 14% to $570,000,000. So I would say quite a good development.

You can see that Europe, North America increased, while emerging market decreased a bit from 45% now to 38%. We were happy in Pulp and Paper. We got another complete pulp mill in China awarded in the first quarter. And you might remember that we had been awarded two complete pulp mills in China in Q4 last year. So it’s quite a positive sign towards us regarding our technology.

Also a good, let’s say, a good signal for the Chinese market in total. We have two on top of that, we have two large orders, one from Japan and one from USA. So quite good. Constant growth in service supports our more stable business. In metals, it’s I would say, globally, as I said, it’s rather stable, minus 1%.

Good to see also here, we could see a significant growth in China, where I would say the automotive industry has maybe a bit different cycle than what we see on the in Europe and U. S. With the traditional OEMs. In hydropower, It’s a good development driven by rather many medium sized orders and further growing in the service rehab business, but also grid stability played a role. Environment and Energy, we had a, I would say, a slight decline.

But I would say on a very high level, $443,000,000 is quite good. We had a in separation and pumps, slow start in the year, while biofuel and clean air had a rather good start in the year. If you look to the revenue, we happily see that the revenue in service could increase. We have a decrease overall by 7%. That’s mainly driven by pulp and paper and metals.

And here, again, we have in Pulp and Paper, the decline mainly relates to the or completely relates to the capital business, driven by the low order intake a year ago, while we could grow the service. In Metals, we have two we have a decrease in Europe and North America. We could see an increase in China. In hydropower, you see we are up 23%. That’s clearly driven by the good order intake we have now basically for the last five to six quarters.

As I told you previously, the execution time in Hydro project is a bit longer. So the start was rather slow, but now we see the sales coming. Project execution is solid, so nicely 23% up. Environment and Energy is up by 6%. Good development across all industries.

That leads to a backlog of EUR 10,200,000,000.0, which is a good it’s a good stable cushion for our sales and for the remaining part of the year. And as usual, approximately twothree of the backlog is attributed to hydropower and pulp and paper with a share of hydropower now at 40%, clearly supported by the excellent order intake that had now for the past quarters. We move to the EBITA. We can see that EBITA dropped along with the revenue. However, profitability remained at a good level, 8.1% on a reported EBITA margin.

And on a comparable EBITA margin, we even moved up from 8.1% to 8.2 percentage. On the revenue, that’s a drop of 6%. That’s definitely attributed to good execution of the projects and also first effects on our overall capacity reduction and restructuring efforts that we have started actively last year. That was mainly in the areas of metals and pulp and paper, where we have made these capacity reductions. And if we conclude that in total, we have reduced headcount in Pulp and Paper and Metals in the last in 2024 and the first quarter, ’20 ’20 ’5 in total, approximately 1,300 people.

That’s counterweighted by an increase in particularly in environment and energy and in hydropower and, of course, the acquisitions we have made. So but at least in Metals and in Pulp and Paper, we could really protect the margins by timely executed restructuring measures. Just to recap on the ESG, that’s the status end of twenty four. Nothing you know that. I think we are well on track to reach our 25 ESG targets.

If we have concluded in the two important acquisitions, the one in the supporting us for our decarbonization efforts that LDX solution will be part of our Clean Air business, which is resting inside environment and energy. It’s an acquisition. It’s a complementary acquisition to what we do. It’s complementary and it’s regionally because their business is mainly focused in North America, and they are mainly in U. S, where we have not a very large presence for Clean Air.

And they have some complementary technology that could also support us in the rest of the world. So we are quite happy sizes, about USD 100,000,000. And we see good market potential, and we see particularly a good growth perspective for them inside the hundreds environment. Then in Italy, we have acquired a Celi paper. It’s a manufacturer of paper machines specialized for tissue paper and board grades.

So we could strengthen our role as full line supplier. We they have a good winder technology that we historically often used anyhow. They are located in Italy and China. Sales revenue is approximately 70,000,000. We expect closing that deal within Q2.

We as I said, we had a we could grow the service business. We have it on an all time high now of 44%. But more importantly, we could grow in absolute terms. We again could grow the service revenue, and that is good and helps us in stabilizing our financial performance, which will now be presented to you in more detail by Vanessa.

Vanessa Helvingen, CFO, Andrids: Yes. Thank you, Joachim, and good morning and afternoon, everybody listening. I’m now going to give you an update on the financial development of the Andrids Group for the first quarter in twenty twenty five and then provide also a summary of the financial KPIs. As mentioned by Joachim, due to lower revenue generation, the absolute EBITDA came in about €9,000,000 behind last year, while EBITDA margin slightly increased from 10.3 to 10.5% year on year. With absolute EBITA down in the quarter, as mentioned, margins have remained stable in percentage compared to the previous year period.

IFRS three related amortization has increased mainly due to the acquisition of LVX Solutions, which led to an EBIT margin 0.2 percentage points below Q1 last year. The financial result is driven by the decrease of interest rates applied on a reduced gross liquidity and a slightly more negative FX impact also played a role. Our tax rate remained stable at 25.6% compared to 25.5% of Q1 last year, and we arrived at a net income of EUR 89,200,000.0 at a net income margin of 5.1%, which is 0.4 percentage points lower than last year. Looking at the free cash flow bridge, you can see net working capital is the major driver of our operating cash flow. However, while the bridge here also shows the year on year comparison, the net working capital change in Q1 twenty twenty five compared to the year end 2024 is not that significant, especially if we look at our operating net working capital.

The roughly CHF 60,000,000 increase is, in essence, triggered on the one hand by higher service activities and thereby increasing inventory by CHF 40,000,000 and on the other hand, by the slowdown in project revenue, which triggers a temporary reduction in payables by €103,000,000 Based on the cash flow from operating activities and after our continuous in house investments of roughly already €50,000,000 in the first quarter, we arrive at a free cash flow of slightly positive twenty three million euros for Q1. This slide illustrates on the left side that we are well funded for the constantly broad variance of liquidity needs from our business to finance the typical project execution cycles. Usually, we have significant advance payments early in the project phase being followed by heavier ramp up of costs at the later stages of the order execution. However, as you can see in the right chart, we have achieved a substantial operating cash flow in the recent years, further improving cash conversion. Now taking a look at our strong financial position.

We managed to keep a solid liquidity over the years that allows us to not only adequately finance our project business, but also to constantly invest in our own assets like service workshops that are close to our customers and also gradually increase the dividend payout. Having digested the payment of the acquisition of LDX Solutions in Q1, we continue to stay flexible for further acquisitions whenever we spot opportunities that meet our M and A criteria and add long term value to hundreds. As you can see in this slide, the dividend was constantly increased over the last five years and increased by 27 since 2020, resulting in a €2.6 dividend per share for 2024, with a payout ratio of almost 52% that we have just paid in April. At the same time, we can show a constantly positive development of our return on invested capital, which again increased in Q1 twenty twenty five, while WACC remained on a stable level and still far below the ROIC. The increase in ROIC is mainly driven by the reduction of invested capital.

So let’s conclude with a summary of our financial KPIs. In a nutshell, it was a good quarter. Even though revenue continued on a lower level similar to Q4 last year, we recorded the second consecutive quarter of recovery in our order backlog. We are extremely happy about the 20% increase in order intake in Q1 twenty twenty five, sustaining the trend from last year, especially for Pulp and Paper and hydropower. The financial stability of our business and the resilient development of our profitability is driven by also our route diversification.

In detail, this means even though the Pulp and Paper business currently undergoes some capacity adjustments due to the lack of large projects in the recent past, hydropower is developing positively, volume and profitability wise. Also due to new technology fueled by our constant R and D spend and cooperation with our customers. Some years ago, we could see the performance of these two business areas being quite the opposite as compared to today. With the respective cycles in these business areas being faced, our level of diversification is a stabilizing factor. While this is considered a weakness by some capital market participants, we think it is, in fact, our clear strength, supporting EBITA margins at a sustainable level.

On the cash side, we have highlighted the increase in operating net working capital, driving our operating cash flow higher CapEx leading to free cash flow of EUR 23,000,000 and furthermore, the cash out of acquisitions, mainly LVX Solutions affecting, of course, our liquidity. The number of employees has, in essence, increased by acquisitions, just mentioned by Joachim, despite also there are variances across the different business areas as well as some restructuring measures ongoing. And yes, well, with this, Joachim is now going to guide you through the details of the business areas. And I hand back to Joachim.

Dr. Joachim Schoenbeck, CEO, Andrids: Thank you, Vanessa. For the insights, let’s move to the business areas and start with Pulp and Paper. We are happy to have Pulp and Paper market back with excellent order intake of €975,000,000 up 50%. That is really good. We are the revenue is declining was declining in the first quarter, driven by capital business, which had a low order intake last year, as you know.

The Service business reached a record level of 60% on the revenue, but that’s clearly driven rather by even though it’s growing, it’s clearly driven by the drop in the capital sales. In total, the combination of a favorable mix and good project execution and early capacity reduction on the capital side, we could keep the EBITDA stable at 10.1%, which we believe is quite good. As I said, the another new complete pulp mill awarded in China is a good strong recommendation of our technology, the third one in a row, two larger orders in the pulp area from Japan and The U. A. Definitely is a good sign that these markets are in good shape.

The I think on the profitability side, I had already explained what was driving it. We moved to Metals, where the order intake is stable on a, I would say, moderate on a quite moderate level. Revenue has been declined a bit 6%. What is here, I would say, really remarkable is the EBITA margin. On a comparable EBITA, we could even we could increase compared to last year 5.3%, showing that despite the, I would say, the moderate volumes that profitability improvements on the right track.

Project execution clearly improved compared to the previous years. And the first fruits of the restructuring measures also could harvested. Reported EBITDA margin also slightly increased from 4.8% to 4.9%. So we would confirm that we are on the right track there. On the market side, we definitely have, I would say, reserved investment position in Europe and North America, but we could see good growth in China.

And that is really something we also see for the next quarters to continue. So we are I would say, we are we see quite active markets across automotive and also steel and aluminum. So hydropower is continuing. The good development I’m reporting now for several quarters, and we really see that this hydropower will take its place in this shift of the energy towards the renewables. The significant role of hydropower is recognized, and now we also see it in the orders.

And it’s there is a good mix of modernizations on of existing plants and also new plants, which make it makes the business very, very well balanced regionally as well as from the operational side. Order intake, nicely up by 14% revenue, up by 23% EBITDA up by 54% to CHF 24,000,000 in the for the first quarter. The margin comparable EBITDA margin up from 5.1% to 6.4%. And here, we can also see that we can grow profitability over proportional with the business, which is good. Order execution clearly has improved.

So we are more stable. We are confident that we can deliver the revenues of the good order intakes, and we could also get some price increases implemented in this good market. So we are quite optimistic. Besides the hydropower capacities installed, we have successfully built up this business for grid stability where we delivered our synchronous condensers to and they also see a big demand on the market, not only in what has been booked, but also what is in the project lists looking out. Looking into Environment and Energy, I would say moderate on the market side, slight decline, 4%, but still on a very good level with a €443,000,000 order intake.

Revenue nicely up by 6% to €332,000,000 EBITA margin, very stable, very solid at 10.1%. We had an excellent start of the year for Feed and Biofuel and for Clean Air, while we have in separation and pumps, it was a bit muted markets. But we are happy that we could get the profitability very stable and that despite the rather high R and D spendings we have in this area where we have this green hydrogen, the carbon capture activities where the buildup of our value proposition takes a bit more of R and D money than we usually have in our business. So that was for the business areas.

Lars von Kleff, Analyst, Deutsche Bank: We

Dr. Joachim Schoenbeck, CEO, Andrids: can we will confirm and can confirm our guidance for 2025. So we see the revenue between EUR 8,000,000,000, 8 point 3 billion for year end and a comparable EBITA margin from 8.6% to 9%. So that is that remains our guidance. And you might ask what is about the tariffs. Are we not affected?

And I can tell you, we do not see adverse impact on the markets yet. We keep our financial guidance unchanged. But of course, we are monitoring the situation closely. Maybe to elaborate a bit on that, our business model is based on a system where usually our customers pay the tariffs applied and at the on the laws that apply when we are exporting the goods to these countries. And that’s mainly the case for our capital business.

Our service business is to a widest extent local for local. So usually, there only tariffs basically do not apply. So we checked on our backlog and a potential financial impact on the tariffs on our business. We can consider small uncertainty on the global tariff scheme, especially with frequent changes on a daily and weekly basis, definitely can slow down decision making for investments. But here, we have not seen anything.

So therefore, we have we can keep our guidance unchanged. That’s also the case for the midterm targets. We confirm the 2027 targets revenue between EUR 9,000,000,000 and EUR 10,000,000,000, comparable EBITA margin higher than 9%. That’s basically what we could tell you by now, and we are open for any questions you might have. Thank you.

George, Chorus Call Operator, Chorus Call: Ladies and gentlemen, we will now begin the question and answer Our first question comes from Sven Weier from UBS. Please go ahead.

Sven Weier, Analyst, UBS: Yes. Good morning and thanks for taking my question. It’s just coming back to the current demand and ordering activity. Obviously, you had a really good start. I was wondering on Pulp and Paper specifically.

I mean that’s been a tough market for the last one or two years or so. So is it fair that despite the recessionary fears that are out there that this market had reached such a low level that the incremental downside would actually be quite limited and some of the pulp and paper guys are now moving ahead on strategic projects kind of nevertheless? That’s my first question.

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. It looks like that we have gone through the trough now. It’s good that the market came back and that we could see regionally quite distributed Asia and North America. All of that is without any of these giant projects that you sometimes see in South America. So we are happy that this market is back to normal.

And that’s that is not too surprising because if you have lower investment for a couple of for a certain amount of time, then you need to do some to get your assets up in shape So I would say that is very normal. On the long run, we still believe on that the growth in Pulp and Paper is sustainable, demand in Pulp remains strong worldwide. And we still firmly believe in the potential of pulp and paper to replace plastics and other material in packaging as well as in textile. So I would say both on the short term and the long term, we are not too concerned and happy that this market is back in good shape now.

Sven Weier, Analyst, UBS: But this sounds like Q1 should not have been like a big blip. And then in Q2, you go back to a much lower level. I mean it was high, of course, so we probably shouldn’t expect that to be every quarter, but you’re probably not going to go down drastically sequentially either. Is that fair?

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. We see solid projects of this in this medium sized range. And this, I would say, I cannot I don’t expect that we now book 1,000,000,000 in every quarter. That’s very clear. But we have I think we have a a solid project project lists.

And it’s it’s a I would say it’s a bit better in in part than it is in paper.

Sven Weier, Analyst, UBS: And have you seen any any behavioral changes of your clients since April? Or is the decision making still kind of the same that you saw in the first quarter?

Dr. Joachim Schoenbeck, CEO, Andrids: I mean they are all serious people who are definitely affected by the tariffs, and they need to sit down and, I would say, adjust their supply chains and operational models to the reality of the new tariffs. So we expect, like with all of our business partners, that decision making will slow down, yes, but definitely, it will not the tariffs will not change the fundamentals of the demand side. That is that’s for sure that’s for sure not the case.

Sven Weier, Analyst, UBS: Yes. And I think it would seem to me that when I look at Pulp and Paper, I mean, it looks to me a little bit less into the epicenter of the tariffs than maybe other things when you look between South America, exports to China. And it’s not immune, right, but it’s maybe not the worst bit and probably the same could be said for what you do on the hydro side and on the environmental side.

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. I would say that’s not targeted. And we also need to remember that we are not producer of pulp or any other products. We are machinery supplier. And one of the of at least the communicated goals of the politics in The U.

S. Is the reshoring of a manufacturing base in The U. S, and that definitely would support our business on the long run because we are delivering the machinery to reinstall that manufacturing base. And to the largest extent of our product portfolio, we do not have U. S.

Competitors. So from that, I would say we are definitely not in the main target of these activities.

Sven Weier, Analyst, UBS: Makes sense. Thank you, Doctor. Schoenberg.

Dr. Joachim Schoenbeck, CEO, Andrids: Thank you.

George, Chorus Call Operator, Chorus Call: Our next question comes from Lars von Kleff in Deutsche Bank. Please go ahead.

Lars von Kleff, Analyst, Deutsche Bank: Thank you very much. Good morning. Lars von Kleff, Deutsche Bank. Thanks for taking my questions. Two, and this would be following Sven’s questions on the order intake.

I mean, Partner Paper order intake was really strong in Q1. I guess, momentum is holding up well. Is that already enough to make you optimistic that we could see revenues in Partner Paper for this year even increasing year on year? Or is it too early to say? I mean you also remarked that you see further growth in the Service business, which should then materialize as revenues this year already, I would assume.

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. I would see I would be could book these orders early, yes. Growth, I would be rather cautious as the I would say, the normal cycle of the project would not predict that. And we do not see that acceleration of these projects that this is now very likely to happen, So I would say we will have definitely stabilized, and we have a much better outlook now in Pulp and Paper than we had we had half a year ago. And the restructuring capacity adjustments, they come into place, so we also protect profitability there.

Lars von Kleff, Analyst, Deutsche Bank: Perfect. Understood. And then maybe quickly focusing on Metals. Order intake in Q1, rather flat, minus 1%, give or take. And you’re talking about quite active markets.

So you’re seeing momentum coming back? Or is it too early to say?

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. We see quite active market in Asia. We see, I would say, muted markets in North America at the moment and in Europe. We know that the large customers we have in North America in that area, they are all in one on one discussions with the authorities for tariff exemptions. That is now going on.

Because if we want to if they want to make a reshoring of manufacturing, if they want to make it viable, usually, you need steel, you need aluminum. It doesn’t work without. So therefore, we are on the midterm. We are not too pessimistic there.

Lars von Kleff, Analyst, Deutsche Bank: Understood. Thank you very much. I’ll get back into the line.

George, Chorus Call Operator, Chorus Call: Our next question comes from Daniel Lyon with Erster Group. Please go ahead.

Daniel Lyon, Analyst, Erster Group: Yes, good morning. Thanks for letting me on as well. Actually, I’d like to follow-up on the order intake in pulp. Do you see the recent awards that we saw in Latin America and also Asia S, Japan, does it influence the investment decisions for further larger greenfield projects in Latin America?

Dr. Joachim Schoenbeck, CEO, Andrids: I cannot connect that.

Daniel Lyon, Analyst, Erster Group: I

Dr. Joachim Schoenbeck, CEO, Andrids: would say I would say the what has been but that has been true the last year that in Brazil, with the size of the projects that we are now talking about around 2,500,000 to 3,500,000 tonnes per year. The size of the project is that big that basically the country cannot support two of these projects in parallel or at least it would be quite a stress. So therefore, you could say that the investment in South America last year has an impact, but this impact will be gone by end of this year. The other projects in Asia and North America are not affected by the decisions in South America. That’s at least my view.

Daniel Lyon, Analyst, Erster Group: And also not the other way around?

Dr. Joachim Schoenbeck, CEO, Andrids: No. I no, not also not the other way around. No.

Daniel Lyon, Analyst, Erster Group: And then one related to the intake. Have you already received the down payments for these bigger orders, bigger contracts that you signed?

Dr. Joachim Schoenbeck, CEO, Andrids: I would assume so because otherwise, we don’t book them. Vanessa, you have you can provide any additional insights there.

Vanessa Helvingen, CFO, Andrids: As far as I know, we have received for two of these three mentioned orders, but I have to check on this.

Daniel Lyon, Analyst, Erster Group: Is there anything does does the does the amount change the share? Usually, it’s like 20% down payment. Right? Is this still the case?

Dr. Joachim Schoenbeck, CEO, Andrids: That’s a right order of magnitude, yes.

Daniel Lyon, Analyst, Erster Group: Perfect. Thank you very much.

Dr. Joachim Schoenbeck, CEO, Andrids: Welcome.

George, Chorus Call Operator, Chorus Call: As a reminder, for questions from the webinar, please click the Q and A button on the left side of the screen and then click the raise your hand button.

Matthias Feifenberger, Investor Relations, Andrids: We have another question set of questions from Akash Gupta from JPMorgan who could not attend the entire call. I will read it to them. I think the first one is about large projects that we mentioned in doctor Schoenberg’s elaborations. It’s one bigger order in Japan, One bigger order in The US and both in pulp and paper. And the second one is to give us a feeling about the underlying service growth.

And I would ask Doctor. Schoenberg to give more color on that, please.

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. So we had large orders, just as you already said, one from Japan, One from U. S, both for pulp assets and both with an order value above 100,000,000. So that is quite substantial. And we see it as a good sign for these markets because these markets have local these orders locally have some impacts on also on other regional investment decisions.

On the order intake service mix, we have a nice growth in service revenue. We grew by 5% compared to Q1 of the previous year of 24%, which is very good. That growth was driven by hydropower and by environment and energy, while it was rather flat for pulp and paper, 1% change and a small decline in metals 3%. So but overall, it’s good share. It’s a record high.

It’s a 44%. It’s I would say, it’s really it’s a good development.

Matthias Feifenberger, Investor Relations, Andrids: Thank you. I think we have one more question in the queue.

George, Chorus Call Operator, Chorus Call: The next question comes from Peter Rothenheimer with Petrobank. Please go ahead.

Dr. Joachim Schoenbeck, CEO, Andrids: We cannot hear you.

Peter Rothenheimer, Analyst, Petrobank: Okay. Can you hear me now?

Dr. Joachim Schoenbeck, CEO, Andrids: Now we can hear you. Thank you.

Peter Rothenheimer, Analyst, Petrobank: Okay. Thank you. First, a question on environment and energy. So how it looks as a project pipeline on the one hand for hydrogen and on the other hand for carbon capture? Do you see here some bigger projects coming up?

Dr. Joachim Schoenbeck, CEO, Andrids: Yes. Basically, the situation has not changed since last year. We see quite significant projects, high market activity and I would say a good interest in FEED studies and preliminary final investment decisions. Would say the climate has not changed and we do not expect to help it. So we see activities, we see high interest in these technologies and but we do not see a change that everybody is now placing orders.

The announcement in Germany for infrastructure investment extraordinary of half of 500,000,000,000 helped in for the situation in Europe. We I would say we keep on there and we improve our offerings. And we expect it to change, but we cannot give definite dates when it will be. It is for sure slower than we hoped for two years ago when we started that journey, but we are confident that it will materialize.

Peter Rothenheimer, Analyst, Petrobank: My second question would be for Vanessa regarding the financial results. So Mr. Nettersheim said in recent calls that Andrids would expect a significant improvement in the net financial result in 2025. Now financial result in the first quarter was relatively weak. What is your expectation now for the full year?

Do you still expect then positive financial result for the full year?

Vanessa Helvingen, CFO, Andrids: Yes. Well, thank you for the question. I mean this is specifically also difficult to judge on the interest rate development that we might expect also throughout the year, yes? So we have undertaken already some actions in terms of tax optimization globally to foster the result improvement. But yeah.

So I mean, you know, it it has a lot of of parameters to that that are not always under our control.

Peter Rothenheimer, Analyst, Petrobank: Can you confirm that the first quarter financial result was extraordinarily high compared to what you expect for the upcoming quarter?

Vanessa Helvingen, CFO, Andrids: No, it was not extraordinarily high. No, that’s not the case. We actually expect improvement throughout the year towards the end of the year. So you saw a decline on this from last year end of last year, at least on the margin as well on the absolute figure, of course, and we expect further improvement throughout the year. Does that answer your question?

So maybe I don’t get your point.

Peter Rothenheimer, Analyst, Petrobank: Yes. So the point was from the financial result, I would have expected overall positive net financial result for the full year. And therefore, I was a little bit surprised about minus CHF 6,700,000.0 net financial result in Q1.

Vanessa Helvingen, CFO, Andrids: Okay. Yeah.

Matthias Feifenberger, Investor Relations, Andrids: Okay. Great. Thanks for the interest in Andrids and for our management team for the elaborations. I think there’s no further questions. And I would like to hand the call back to Doctor.

Schoenberg for any concluding remarks.

Dr. Joachim Schoenbeck, CEO, Andrids: Thank you, Matthias. Yes, thank you very much for attending the call. We are happy with the first quarter. We are looking forward with solid project activities to continue on that path for the second quarter and the rest of the year, but we are prepared for anything else that the macroeconomic environment is delivering to us. So thank you very much for your attention and see you back in three months.

Thank you very much.

George, Chorus Call Operator, Chorus Call: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for your participating in the conference. You may now disconnect your lines. Goodbye.

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